Sage published a report this week that looked at the impact of the pandemic on small and mid-size businesses in the US. The report and additional data provided by Sage to Enterprise Times has some interesting insights. The pandemic has acted as a catalyst for several changes in business, and even as revenue levels return to pre-pandemic levels business have changed permanently
Enterprise Times also posed Nancy Harris, EVP and Managing Director, Sage North America some of the questions raised from reading the findings.
The report, entitled 2021 Return to Growth Outlook report (Registration required) was based on a survey conducted by LEWIS research. They surveyed 1,050 employees from businesses with between 50 to 1,500 employees.
The report first highlights the key findings
- 18% of organisations revenues are already above pre-pandemic levels
- 54% expect revenues to reach pre-pandemic levels by September, 77% by December 2021
- 46% of organisations have already implemented long term or permanent remote working
There is increasing optimism on growth
There is also optimism on growth with 19% of finance teams projecting double-digit revenue growth.
The report is divided into 3 main sections.
- A Look Back: focuses on how organisations adapted to the pandemic.
- Community and Employees: studies how organisations engaged better with both these stakeholders.
- Ready for Growth: takes a look at the optimism and some reason behind it.
Nancy Harris, EVP and Managing Director, Sage North America commented: “It’s no surprise the COVID-19 pandemic disproportionately affected small and midsize businesses, along with their employees and customers. As we faced unique challenges at home and work, businesses saw great success implementing new programs, offering flexible work arrangements, and prioritizing commitment to the communities in which they operate.
“As the world begins to reopen, it is critical that these key learnings from the last year are not lost, and that organizations continue to leverage creativity and technology to foster stronger relationships with employees, customers, and prospects for continued growth.”
A Look Back
There have been many surveys over the last few months that have shared similar findings. The IAB recently published a report showing the changes in advertising spend. This is further reflected by 45% of respondent’s increasing social media footprint and budgets over the last few months. The pandemic also accelerated digital transformation for 81% of organisations another common finding in other research. Sage also believes that these are changes that many organisations will not reverse in the future, though it didn’t seem to ask a question around this.
Government support vital
One of the key factors in supporting businesses during the pandemic was the support of federal and state authorities. Around two-thirds received a Paycheck Protection Program (PPP) loan. Regionally 65% of organisations based in the West received a loan, the highest. The lowest figure was in the South with only 595 receiving PPP Loans. The report provides some further insights into other regional findings.
Looking forward many organisations are looking for further government support including 34% who want loan forgiveness or debt relief. Enterprise Times asked Harris for the Sage view on this. In the UK Sage often speaks out on behalf of small businesses. Harris answered:
“It is clear from the survey results that government assistance, especially in the case of a global pandemic like COVID-19, can be very valuable to small and midsize businesses. 74% of our respondents said that government programs had a somewhat or significantly positive impact on their business. In fact, nearly two-thirds of the businesses we surveyed took a PPP loan – and of those businesses, two-third said it helped them, including one in three who said it is the reason their business survived. While one in three respondents said loan forgiveness would help their business in 2021, that still lags other options including funding for COVID-specific items like testing and personal protective equipment.”
“Ideally, assistance at federal and state levels would focus on programs that help both the company and their employees (such as the PPP that offers loan forgiveness, but requires most of the money to be used for payroll to employees and keeping the business afloat). This is also echoed by the survey results, with nearly half of respondents saying programs to help employees would also help their business and 40% stating that additions PPP-type assistance would be beneficial.”
Community and Employees
Sage also found that businesses across the US increased engagement with both local communities and their employees. 53% of organisations donated services with 60% of financial services organizations making services available as part of charitable efforts. 50% of manufacturing companies have donated goods over the last twelve months. The level of giving is also set to increase. 63% of healthcare companies intend to increase donations and 90% of manufacturers will maintain or increase current levels of philanthropy.
Sage applications can assist organisations. Harries shared: “Sage applications aren’t inherently geared toward giving back to the community. However, we know our financial software can play a huge role in helping companies to better manage and monitor their financials to (ideally) put them in better position to have funding available to give back to their community. In addition, volunteer time is something that can be tracked and managed in Sage People – we know, that’s what we do. However, at the end of the day, a company’s overall charitable giving is more of a foundational corporate direction that is driven by the company’s leadership team and board of director.”
Sage itself has set an example in the industry Harris commented: “Some companies make it a priority – such as Sage. While the company has always had a focus on giving back, Sage launched the Sage Foundation back in 2016 to expand the company’s efforts. This past year marked the fifth year of doing good in our local community and in that time, Sage has donated money and software to the communities we serve. Additionally, our employees volunteered more than 110,000 working days to local communities across 22 markets. Sage allocates 2% of every employee’s work-year (5 days) to use toward volunteering.”
War for Talent
Employee engagement has changed forever. 27% of businesses implemented non-traditional HR policies for the first time. 24% added new employee recognition programs and many supported training. Many are also looking to increase investment in employees to retain talent. 37% of businesses with 500-999 will do so. However, only 10% of smaller businesses with 10-249 are looking to do so.
Enterprise Times asked Harris if there might be a reason behind this. She replied: “While we can’t know for sure, one reason could be that these smaller organizations were hit harder by the pandemic and are focused on just keeping their businesses afloat. In the report, three-quarters noted they still needed more COVID-19 relief and nearly one in four (22%) said they expect to see no growth or a decline in revenue for 2021.”
Some of the new investment is in training. 90% of manufacturers and 87% of financial services plan to increase investment in training. Some industry sectors also have a greater challenge to retain talent. Healthcare (79%) and manufacturing (63%) organisations intend to increase employee retention budgets to support programs in 2021.
Many organisations do not plan to roll new benefits back post-pandemic. Organisations in Manufacturing (11%), Healthcare (12%), and Financial Services (13%) are planning rollbacks. Only 19% of the Financial Services sector are not planning to return any initiative from the last twelve months.
Ready for Growth
There is optimism for the future with three factors contributing most to the chances for growth:
- Technology – 38%
- COVID-19 vaccine rollout – 32%
- Employees -26%
Overall 75% of financial decision-makers believe they will return to growth in 2021. While firms of 500-749 employees are the most optimistic it is the smallest and largest respondents that were the most pessimistic. More than half of these firms are reducing budgets for the coming year.
79% of respondents believe that their Finance leaders will impact business direction more in 2021, compared to 2020. They will have the biggest impact in the following four areas:
- Technology -40%
- Customer Service – 28%
- Marketing – 28%
- Strategic Planning -28%
CFO’s are often responsible for technology within organisations so that figure is not surprising. It also ties into the acceleration of digital transformation. The unanswered question is where will the spend on technology focus? For Sage, it will hope it is the Finance and HR solutions.
Enterprise Times: What does this mean
This is a fascinating report. It has uncovered a lot of information about how business adapted and will continue to change after the pandemic. Sage has more statistics than included in the original report, notably around the different industries. It should consider producing more content that delves deeper into the different sectors to surface more insights than were made available.
There are three takeaways from the report:
- The mood in business is optimistic for the near future.
- Organisations are digitally transforming themselves and adjusting to new ways of working.
- While organisations may not look to hire new employees, they will fight harder to retain the ones they have. There may be a knock-on impact of this, it is not just about rewarding employees, organisations will also need to better measure performance to ensure they retain the right employees.